10 June 2011

Jobs fund launched

The much anticipated R9 billion Jobs Fund was launched by Finance Minister Pravin Gordhan on 7 June 2011, who appointed the Development Bank of South Africa (DBSA) to establish and manage the fund. The objective of the Jobs Fund is to co-finance public and private sector projects that will significantly contribute to job creation. The activities of the Jobs Fund will be governed by advisory, technical and evaluation committees, each with specific responsibilities ranging from mere oversight through to final funding adjudication.

The Jobs Fund is divided into four areas of focus (or funding windows) and will provide support in the form of grants to projects, which contribute to addressing social and economic objectives, with significant job creation being the most important criteria. Co-financing grants will be available to the private sector, non-governmental organisations, municipalities and government departments.

Applicants would need to satisfy both eligibility and impact criteria in order to be considered for funding. Eligibility criteria will be used to determine whether or not applicants conform to the core pre-requisites of the fund, while impact criteria will measure the relative merits of each application compared to all others under consideration. Only those applications with the highest impact scores will be accepted for consideration.

Some of the more significant grants of the Jobs Fund include:

  • Private sector investors - Investors must commit to providing matching funding at a minimum ratio of 1 : 1. The minimum grant size provided by the Jobs Fund will be R5 million, implying a minimum overall project size of R10 million;
  • Non-Private investors - Investors must commit to providing matching funding at a minimum ratio of 0,2 : 1. The minimum grant size provided by the Jobs Fund will be R5 million, which implies a minimum project size of R6 million.
  • Infrastructure investment projects - Investors must commit to providing matching funding at a minimum ratio of 1:1 over the lifetime of the project. The minimum grant size provided by the Jobs Fund will be R10 million, implying a minimum project size of R20 million.

Given the wide scope of the Jobs Fund and the fact that R9 billion might not go as far as it used to, it is anticipated that the DBSA will be receiving a large number of application from various organisations in South Africa. Cliffe Dekker Hofmeyr is in a position to assist qualifying organisations through the application to final adjudication phase for grants under the Jobs Fund.

Ruaan van Eeden, Director, Tax and Mari Wichmann, Candidate Attorney, Tax

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